Tech stocks drive market higher as Netflix surges
Technology stocks led the US market higher on Wednesday, with Netflix (NFLX) shares hitting a record high after the streaming service reported strong earnings. The Nasdaq Composite (^IXIC) rose nearly 1.3%, while the S&P 500 (^GSPC) climbed over 0.6%. The Dow Jones Industrial Average (^DJI) gained 0.3%.
Netflix earnings drive Nasdaq higher
Netflix shares surged over 10% after the company reported a surge in subscribers and strong earnings for the fourth quarter of 2024. The company's revenue and earnings both beat analysts' estimates, and its subscriber base grew by 18.9 million, the largest quarterly gain in Netflix's history.
Trump's AI investment sparks tech rally
President Donald Trump's announcement of a new $500 billion private-sector investment plan for artificial intelligence (AI) infrastructure in the US boosted tech stocks. Oracle (ORCL), a partner in the "Stargate" venture, saw its shares rise over 6%. SoftBank (9984.T) and Arm Holdings (ARM) also gained.
Tariff worries linger despite rally
Despite the market rally, concerns about a trade war between the US and China remained. Trump said on Tuesday that his administration was considering imposing a 10% duty on Chinese imports on Feb. 1, and he vowed to hit the EU with additional tariffs. However, the market was relieved that China wasn't targeted in Trump's first policy moves, which promised new duties for Mexico and Canada.
Johnson & Johnson earnings disappoint
Shares of Johnson & Johnson (JNJ) fell despite the company posting strong sales and profit for the fourth quarter and full year of 2024. Investors weighed the impact of a strong dollar, which can hurt the earnings of US companies with international operations.
Higher interest rates may be the new normal
Bond yields have been rising in recent months as investors expect the Federal Reserve to raise interest rates to combat inflation. While yields have recently eased slightly, analysts believe that higher rates are likely to persist. BlackRock's Investment Institute believes that the rise in rates is a result of structural factors, such as an aging labor force and rising debt levels.